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If I leave P&G, how do I make sure I don’t outlive my money?

| August 17, 2015
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By Jim Eutsler, P&G Retirement Planning Specialist

 

You have worked hard making Tide, Swiffer and Pampers be the best brands in their respective categories. You've accumulated some wealth and are asking yourself whether you feel confident you can turn in that badge for good and walk through the turnstile for the last time.


Here are a few questions you need to consider before setting your sights on walking away from your job:

  1. How much do I need to have saved?

    While cliché to say, there is no right answer to this question because this is largely a lifestyle question, which varies from person to person.  This number will act in conjunction with your other income sources (Social Security, part-time job, etc.) to help determine how much you can sustainably spend in retirement if your goal is to have the highest likelihood of not outliving your money.  Your PST and P&G Savings Plan will play an integral part in helping to align the income/spending equation. 
  2. How much do I live on now and how much will I live on in the future?

    One of the most influential aspects of not outliving your money has to do with your expenses.  It is important to realize some costs you have while working will not necessarily be there when you retire.  Think parking expense, gas/vehicle wear from daily commutes, dine-out lunches, etc.  Given most people do not retire and then simply sit at home all day and watch TV, there will likely be other costs you pick up such as traveling, new hobbies, or additional charity involvement.  Sit down and thoroughly create a list of the retirement conditions you want to be living and what the associated lifestyle cost is to actually do it.
  3. How is your health?

    Anymore it seems like there is a 3rd irrefutable truth in life to add to death and taxes, and that is that healthcare costs will increase year-over-year.  If you are able-bodied with a solid health history and no genetic predisposition to disease, I tip my hat to you.  However, if you do have ailments, especially something that is chronic, you need to factor this into the expense equation.  Depending on the severity, you may need to factor in long-term care as well.

This list is by no means exhaustive, but rather illustrative of some of the key issues to consider.  You should do lots of research online to supplement your own thoughts and possibly uncover further areas you need to explore.

At HCM, a Cincinnati retirement and financial planning firm, we use sophisticated modeling software to provide our clients with a Portfolio Snapshot™.

Part of this output is providing a percentage number which gives the likelihood of a client not outliving their money.  For example, if the model computes your number to be a 92% that tells you there is a 92% likelihood that you will still have money left over when you die, given all of your constraints.  This can be a very comforting (or eye-opening) exercise for those contemplating retirement.  If you want to walk through this together, feel free to reach out to me at jim@hengeholdcapital.com

Next up will be ‘The Cost of Higher Education’. 
Content in this article is not intended to be financial advice. Instead, we think of it as educational and financial education is important to us. 
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